Explain how much loss mike can deduct on his tax return

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Assignment

Your client Mike Jones, a full-time computer programmer, purchased a limited partner interest for $50,000 in a computer software limited partnership run by one of his friends. Mike spent approximately 200 hours actively providing services for the partnership during the year. The limited partnership generated a $300,000 loss of which $85,000 is Mike's share. Assume Mike's only other income is W-2 wages of $150,000.

a) Wrie a memo to your partner, citing the relevant tax authority, to explain how much of the $85,000 loss Mike can deduct on his tax return.

b) Assume the same facts as above except the computer software company is a limited liability company

Write a memo to your partner, citing the relevant tax authoirty, to explain how much of the $85,000 loss Mike can deduct on his tax return.

Reference no: EM131186483

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